FAY v Witte

Title: FAY vs. WITTE Date: July 11 1933 Parties: Richard Fay, respondent Harry Witte, defendant Facts: A promissory note was executed and delivered on the date mentioned: Albany, New York, Jan. 13th, 1931. November 1st, after date We promise to pay to the order of Harry O Witte, Two thousand Five Hundred Dollars, ($2,500.00) at the Central Bank of Albany, New York, with interest. Value received. Harry O Witte, Inc. By: Harry O Witte, Pres.

On Feb 14, Witte indorsed the note in the following manner:

“I hereby assign all my rights and interest in this note to Richard Fay in full, Harry O Witte Fay became the holder upon delivery and brought this action against Witte as an unqualified indorser, the note as proof for non-payment, and due notice given to Witte as indorser.

County Court: • DISMISSED Witte’s motion to dismiss. • Held Witte liable as an unqualified indorser. Appellate Division: • CONTENDS that Witte was an indorser without recourse. • Witte was not liable as an unqualified indorser. Indorsement implies two things: (1) transfer of note; and (2) a promise o pay of the maker fails to do so. • Witte by having the note transferring title impliedly excluded the second condition or implication by the word “assign”. Issue: WON Witte, upon assignment of the note, rendered him an indorser without recourse.

SC Ruling: No. To consider the payee as an indorser, it must be expressed using the words “without recourse”, or any other words of “similar import”. In this case, no such words were used. The law does not allow implications. Ratio: We have a clear expression of assignment and transfer. The note and title were transferred to Fay and we find nothing else, The words “without recourse” or any other words of “similar import” were not used. We may imply by the use of “assign”, as did the Appellate Division, that the payee considered himself no longer liable, but implication is not permitted by the statute. The denial of recourse must to a prior indorser must be found in the express words, “without recourse” or other “similar import”. This indorsement contains no such words. Witte became an unqualified indorser liable as such upon non-payment and notice of protest. Doctrines: The payee’s name being upon the back of the note, he is presumed to be an unqualified indorser, unless there are words which express a different intention. A qualified indorsement constitutes the indorser a mere assignor of the title to the instrument. It may be made by adding to the indorser’s signature the words ‘without recourse’ or any words of similar import. Such an indorsement does not impair the negotiability of the instrument.